Ethereum has been plagued by high transaction fees since it gained popularity, especially in the last two years, with the launch of hundreds of dApps and the rise of DeFi. This has been referred to as a blockchain scalability problem: keeping transaction fees low, while the intake of users increases. Arbitrum is looking forward to providing an easy-to-use, off-chain data storage network that can be used to support Ethereum applications with lower transaction fees and increased privacy.
Yearn.Finance recently integrated with the L2 network, Arbitrum, an optimistic rollup that allows Ethereum-based tokens to interact and make cross-chain transactions. The Layer 2 network will provide support for Yearn.Finance’s token economy, which includes an arbitrage marketplace, lending platform and loan collateral marketplace, which further enables the platform to scale up in transaction volume.
The project initiators say that by integrating with Arbitrum, users of Yearn.Finance will be able to transact tokens without moving them on the leading Ethereum network, resulting in lower transaction fees, which could save as much as 10x on gas fees. Yearn.Finance ranks seventh in the DeFi index, when measured by total valued locked (TVL), which is currently $2.94 billion, according to DeFi Pulse.
As DeFi expands and develops, it will be interesting to watch how developers and other blockchain enthusiasts continue to use it. Scalability is a persistent issue with the Ethereum main chain, and many developers are turning to Layer 2 mainstay scaling solutions to alleviate that issue. The addition of Arbitrum support and Layer 2 protocols, such as Optimism and Polygon, will continue to help Decentralized Finance (DeFi) and non-custodial exchange services achieve their scaling goals.
